Coal Mine Shutdowns

The Eagle Butte mine is seen Sept. 6 just north of Gillette. 

CASPER (AP) — The federal government began a fraud investigation into coal company Blackjewel LLC prior to the company’s sale last week of two Wyoming coal mines, according to court documents.

Documents filed Saturday indicate the investigation also preceded Blackjewel’s July bankruptcy filing, The Casper Star-Tribune reported.

Blackjewel owes the federal government about $50 million, court documents said. After failing to obtain funding from a key creditor, the insolvent company shut its mining operations, including the Eagle Butte and Belle Ayr mines in Wyoming, which employ about 600 people.

The filing said the government has been investigating potential violations of the False Claims Act, which holds corporations liable for defrauding the government.

The government asked a West Virginia federal bankruptcy court to delay discharging Blackjewel of its debts to allow the investigation to continue. A federal judge approved the sale of the Wyoming facilities to Eagle Specialty Materials without Blackjewel’s debt obligations.

Contura Energy, the current permit holder for the mines, agreed to pay $90 million in startup capital to take them over and assume cleanup obligations. In turn, Eagle Specialty Materials will pay Blackjewel $16.2 million.

The investigation will not affect the purchase of the mines, said Joshua Macey, a Cornell University law professor.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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